Fears that bank regulation or capital controls could lead to a “balkanisation”
of global capital markets are overstated and should not constrain policy
action to address the problems created by volatile short term capital flows
and excessive credit creation, says Adair Turner, Senior Fellow at the
Institute for New Economic Thinking and former chairman of the United
Kingdom Financial Services Authority.

Speaking at a conference in Delhi sponsored by the Reserve Bank of
India, Turner focused on the links between the international monetary system
and domestic financial stability. [For the text of the speech and
presentation please see below.] ...

Ultimately, Turner rejected the idea that this would lead to a harmful
fragmentation of global capital markets.

“Talk of such policies is often met by objections that this will lead to a
dangerous ‘balkanisation’ of global capital markets, preventing the free
flow of capital and stymieing its allocative efficiency benefits,” he said.
“But since the evidence for the benefits of financial integration is at best
elusive and ambiguous, some ‘balkanisation’ of short term international debt
markets could be a good thing”.